Idenix v. Gilead: $2.5 Billion for Patent Infringement

Merck’s sub Idenix was just awarded $2.54 billion for Gilead’s infringement of its Hep-C treatment patents. Asserted patents include Nos. 6,914,054, 7,105,499, 7,608,597, and 8,481,712.. D.Del. Case No.14-cv-00846-LPS. Merck announced that a patent right “guarantees a period of return on investment [and as such] patent protection provides the research-based pharmaceutical and biotechnology industries with an incentive to invest in research and development.”

you feel compelled to comment here about the goings on at another blog

Indeed, I do.

That “other blog” is infested with habitual dissemblers and shameless “apologists” who will do and say literally anything if they think they can sc0re some pi tiful point for patent maximalism. You know: people like you. And that’s been the case for a long time. Your ment0r is the classic example, but he’s far from the only one.

There’s nothing inappropriate about pointing out these well-documented facts, “anon.” On the contrary.

For the avoidance of doubt, that other website is maintained by good and hard-working people whom I have met in person.

I have a record of writing and publishing in the IP field stretching back to the late 1970’s. At that time I started a monthly newsletter on IP decisions which I edited for some 11 years before passing it on to a successor. In recent years I have edited the CIPA Guide which is compiled by a team of which I am also a member and I also wrote a book entitled Fundamentals of Patent Drafting.

What I have said in the preceding paragraph is not by way of self-publicity but to explain to readers the level of hands-on experience I have in writing in the IP field. When I completed Fundamentals and having been through the experience of writing and compiling a book, I made a resolution that I would NEVER criticize the author of a professional book. Similarly having edited a newsletter I will NEVER criticize the author or editor of a professional blog since I am only too personally aware of the unceasing effort and dedication involved. That must apply whether we favor the editorial approach of that blog or whether we disapprove.

We may disagree, but we should do so in friendship and mutual respect, and on the basis of careful reasoned argument. Mere personal abuse should have no role in our debates. So SHAME ON YOU for calling that blog a joke. SHAME ON YOU. Triply SHAME ON YOU. And at this season of goodwill especially.

Don’t underestimate what is useful For example there is today a posting entitled “An Examiner’s Tips For Speedier Patent Prosecution”. Such comments from within the USPTO are always of interest – we need to understand how things look from the other side of the fence.

Most of us are well accustomed to picking out the well-written and helpful postings from others that are less so. Where a guest contributor has a particular viewpoint, that is usually only too apparent. But that does not mean that the blog should be dismissed as a whole or regarded as a joke. Running these things is a great deal of hard work, for which we should be grateful.

Could anyone explain to me why I have morphed from a green vegetable-type creature supported by what looks like a tree trunk to a purple butterfly with wings and two legs? I have lost my personal identity as a vegetable creature.

What do the top ten lists look like now for (1) largest damages awards from district courts for patent infringement and (2) largest damages awards to survive Federal Circuit review? This assumes some of the awards in (1) settle before going to the CAFC.

Let me know if I’m wrong, but in “present dollars” I believe the almost one Billion dollars [with post-judgement interest] that Kodak actually paid Polaroid in one suit for infringement of a dozen instant camera and film patents is still the record for an actual payoff after appeal. [If you add on the injunction and customer refund costs to Kodak it is a great deal more.]
[As noted at the time, one of several mistakes was failing to correctly calculate the odds when a patent owner is suing on multiple patents. See: “Probabilities of Losing As To At Least One Patent In Multi-Patent Litigation,” Journal of the Patent and Trademark Office Society (JPTOS), October 1986, Vol. 68, No. 10, pp. 498-502.]

[The subject suit here has a long way to go to “your 2.5 Billion dollar check is in the mail.” First, post-trial motions, then a Fed. Cir. appeal.]

The claims in the earliest patent — 6,914,054 — are picture claims, about as narrow as can be. I haven’t looked, but I presume the later patents are formulation or method of treatment/administration claims? Or were they able to broaden their originally claims structures with unexpected results (easier to obtain, in some cases, once the drug is being widely administered and the data comes rolling in)?

Also, I detect some bitterness/kvetching among the patent maximalist “free market” table pounders in the thread below. What’s up with that? You guys want to pretend that a picture claim to a drug for treating HepC is “just like” using a programmed computer to send your m0mmy a list of recommended DVDs? Get over it already.

That royalty base amounts to over $7,000 for every Hep-C infected person in the US, half of whom don’t even know they’re infected. And that’s for one drug from one company. Anyone care to guess where the majority of that money is coming from?

The jury’s mere 10% royalty does seem low for a patented pharmaceutical product of this importance, but where did the jury’s $25 billion BASE number come from?
And why not a “lost profits” calculation as an alternative to a royalty % ?

Paul, this low royalty could set a very bad precedent for the drug industry. Take a blockbuster new drug. It would seem that the owner of the patent on that drug would hardly license the patent to any rival for a 10% royalty. But if that is all the drug company could collect, every rival has an incentive to infringe.

One wonders how the infringer got permission to sell the infringing drug? Some kind of flim flam with the FDA? Filing an ANDA always seems to draw a lawsuit.

why is Gilead on the hook? Sovaldi was originally developed by yet another company called Pharmasset, which Gilead bought in 2011 for $11 billion. And Gilead was the one that owned and launched Sovaldi in 2013 when Idenix filed its lawsuit. In other words, the dispute originated with smaller companies that are now owned by two of the world’s largest drug makers….

The verdict overshadows a Gilead victory last June, when a federal court judge decided the biotech did not have to pay $200 million in damages that had been awarded in separate patent lawsuit over Sovaldi because Merck displayed a “pervasive pattern of misconduct.” The judge concluded the Merck lawyer intentionally gave false testimony about his role in failed negotiations between Merck and Pharmasset.

Ned, ANDA proceedings only net a 30 month stay in FDA approval. If the litigation drags on beyond that period, the FDA can approve the generic copy, and the generic manufacturer can launch “at risk” of being found to infringe later. But if the cost is several million in attorney and expert fees, and only a 10% royalty rate applied to the infringer’s profits, there doesn’t appear to be much of a risk.

anon the whole industry only has middlin return on equity numbers- pharm is in the 11%-15% range said and done. Accounting itself is immaterial / unknowable / discretionary for 5% of any business.

A 10% royalty may not be “efficient infringement” any less than its “efficient revenue” for the patentee. Most businesses are in trouble if raw material is much over 30%-35% of total sales. Since we aren’t privy to the numbers or design around possibilities, we don’t know if this deal is a winner or loser for either side, but generally 10% is a very healthy royalty- several points higher than most franchisees pay, for instance, to be a Dairy Queen or a Dunkin Donuts.

The infringer assumedly still has to manufacture, pay commissions, bribe doctors, pay for marketing, bribe distribution channels, etc. It’s a still a tall stack past R&D to make money. The point is that so-called “efficient infringement” is far from a sure thing, and royalty in the 10% or above zones can be highly material to the end-result.